• Global enterprises collectively spent $34.6 billion on cloud infrastructure services in Q2 2020.
  • Amazon Web Services retained its lead in capturing global cloud infrastructure services spend – but Google Cloud and Azure plan to respond.

Global enterprises collectively spent $34.6 billion on cloud infrastructure services in Q2 2020, marking a $3.5 billion increase from the previous quarter, according to Canalys. This represented the largest-ever quarter-over-quarter (QoQ) spending increase for the sector, though the overall growth rate continues tapering off given the overall scale of cloud spending.

Here's how the three US cloud titans performed this quarter - and where they see growth opportunities moving forward: 

AWS is the cloud leader with 31% share of the market in Q2 2020

  • Amazon Web Services (AWS) maintained its position as the cloud leader with 31% share of the market in Q2 2020 — it expects to see growth as companies shift away from on-premise cloud infrastructure to reduce costs. Amazon noted in its Q2 earnings call last week that AWS customers have been aggressively looking for ways to cut expenses. It may seem counterintuitive, then, that it reported a 6% increase in AWS revenue between Q1 2020 and Q2 2020. Amazon CFO Brian Olsavsky said in the earnings call that companies were increasing AWS expenditures as a long-term substitute for on-premise infrastructure, since "on-premise infrastructure is not really flexible to go up or down, and especially in the time of sinking demand, it's a big fixed cost for them." While we think that the vast majority of companies will continue to use multicloud environments — meaning they use both on-premise and public cloud services — AWS and the other public cloud players will likely benefit from a shift toward higher utilization of public cloud services within the hybrid system.
  • Microsoft Azure — which is expanding its infrastructure footprint to reach a wider audience — captured 20% of the cloud infrastructure market in Q2 2020, up from 17% in the previous quarter. Microsoft Azure had the most success of any of the players in stealing market share away from competitors. The wide range of services within the Azure ecosystem undoubtedly helped attract new business — the company noted that 96% of Fortune 500 companies used the Azure Power BI service to gleam insights from internal data. To reach a wider audience, Microsoft is reinvesting in Azure to offer additional availability zones, which will help it appeal to multinational corporations looking to streamline operations across regions.
  • Google Cloud's share remained flat at 6%, but the company is betting on its AI services to be a source of growth. Though Google is still playing catch-up to AWS and Microsoft, it appears the company believes its AI expertise will help it catch up over the long run. Google CEO Sundar Pichai noted on the earnings call that "the longer-run opportunity of actually using AI to truly have business solutions ... for whatever industry you are in, that feels like there's a lot of potential, and we are still very early there." In a recent interview with The New York Times, Elon Musk cited Google's AI project DeepMind as his "top concern" since it "crushes all humans at all games." Whether or not DeepMind represents an existential threat to humanity, it will surely be highly sought after as a cloud service that Google can offer to enterprise customers for solving business analytics.

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